The “greatest irony” is that he is called the Maestro

PIMCO’s Paul McCulley lays out a surprisingly stark bitchslapping smackdown on Easy Al Greenspan. First, he quotes the Maestro:

"In perhaps what must be the greatest irony of economic policymaking, success at stabilization carries its own risks. Monetary policy–in fact, all economic policy–to the extent that it is successful over a prolonged period, will reduce economic variability and, hence, perceived credit risk and interest rate term premiums."

This quote is actually one of a series of statements from the departing Fed Chair essentially claiming that we get Bubbles because Greenie did his job so damned well.

McCulley is having none of this; He deftly uses Al’s own words against him:

"Ah, “the eventual exhaustion of the forces of boom!” Roll enough games without a fingertip ball and you don’t have to worry about overhooking it, as your arm ain’t got the strength. But you do have to worry about underhooking it into the gutter. For, if (1) the “greatest irony” of successful Fed-driven macroeconomic stabilization – notably achieving secular “price stability” – is excessive reduction of risk premiums, otherwise known as bubbles, and if (2) the only strategy available for addressing such bubbles is to wait for their “eventual exhaustion,” then (3) the “greatest irony” is not as Mr. Greenspan declares, but rather that he is called the Maestro."

As if that wasn’t enough, McCulley notes that new Fed Chair Ben Bernanke does not see "the wisdom of relying exclusively on the hands-off-then-mop-up strategy" of Bubble management. Indeed, Helicopter Ben has already stated:

"When this moral hazard is present, credit flows rapidly into inelastically supplied assets, such as real estate. Rapid appreciation is the result, until the inevitable albeit belated regulatory crackdown stops the flow of credit and leads to an asset-price crash. Bubbles of this type may be identifiable to some extent after they have begun, but the right policy is to do the financial deregulation correctly – that is, in a way that does not allow speculative misuse of the safety net – in the first place. Or failing that, to intervene and fix the problem when it is recognized.”

One suspects that McCulley — Managing Director of the largest Bond Fund company in the world —  approves of Bernanke as Fed Chair . . . 


Reflexive Disintermediation: Say What? Learning To Live With It (pdf)
Paul McCulley
PIMco, Fed Focus| November 2005

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  1. B commented on Nov 30

    McCulley isn’t the only one who believes Greenspan has overstayed his welcome. Big Al the bubble pal has taken our economy from a more graceful Volcker to wild whipsaws in need of Prozac. I prefer living with someone who doesn’t suffer from such wild emotional swings as the Greenspan economy. Frankly, he’s been good for greed because he’s created situations of extreme that were financially rewarding for those with the knowledge and wherewithal to play.

  2. anne commented on Nov 30

    The expression you chose to cross out, in comedy, is an offensive expression that should not be used jokingly or any other way. Please be understanding enough to delete the expression.

  3. Justice Litle commented on Nov 30

    ‘Maestro’ really is ironic… the nickname suggests a brilliant conductor, ready and willing to employ a skillful array of subtle and precise tools to get the job done. McCulley’s frustration — and the thrust of the anti-Maestro argument — is that while Greenspan has been versatile and nuanced in his jawboning, he has been brutishly binary in his actual policy choices.

    Instead of utilizing fine-tuned policy shifts to ‘tweak’ the financial markets on a spot basis (like hiking equity margins or introducing variable repo haircuts, both McCulley suggestions), Greenspan has doggedly stuck to his bigass cartoon lever, RAISE on one side and LOWER on the other. Kick the mule in the butt or hit it over the head with a sledgehammer… then shift the blame when things get ugly. Way to finesse her there Maestro!

    Sounds like McCulley (and others) are hoping that Bernanke will take advice from Elvis: a little less talk and a lot more (nuanced) action.

  4. L’Emmerdeur commented on Nov 30

    Perhaps in Harvard, Anne, you and your fascist administrators can squelch such ribald humor. But out here, in the real world, you are just another discount consumer with an opinion that reflects 1/6,500,000,000th of the world’s sentient demographic.

  5. royce commented on Nov 30

    Uh, you don’t need sarcasm or nastiness to defend the use of the term bitchslap. I’d say it’s enough to say that the usage has broadened out from it’s pimp-beating-a-prositute roots to include any form of smackdown, but I suppose it’s Barry’s call on whether he wants to use it after someone has complained.

  6. Barry Ritholtz commented on Nov 30

    I started this career on a Trading Desk. You cannot imaginee how much worse the language is in the real world . . .

    But the bottom line is that anyone who is offended by my language/ attitude / sarcasm is entitled to an unconditional and full refund of their subscription costs . . .

  7. Ari commented on Nov 30

    Comments deleted; posted by a fraud.

    The REAL Ari Lev responded to my email, regarding the jerk who is posting in his name:

    I’ll give you basically the same story I’ve given other blog authors
    and commentators from whom I’ve received similar email in the past.
    I am not “that” arilev. While my name is Ari Lev and I am the
    registered user of the email address, I have never
    heard of nor visited your site. I usually receive two or three
    emails like this per month; always about the comments I’ve supposedly
    made on economic blogs. This has been going on for nearly a year
    now. In fact, I’ve even received email from other bloggers via a
    second email address that I have which also begins with arilev@.

    It may sound crazy but there is either another Ari Lev out there with
    an interest in economics who is using fake email address that I just
    happen to own when posting, or somebody I know is going through a
    terrible amount of trouble to get my inbox “flooded” with a few of
    these emails a month.

    Either way, I’m a blogger myself and wholeheartedly agree with your
    position on vocabulary / colloquialisms. I have no problem with the
    phrase BitchSlap no matter what the context.

    I used to simply delete these emails but lately I’ve been responding
    and asking bloggers to ban my email address from posting to there
    sites. While I don’t like the idea of stopping somebody out there
    from posting freely to sites that interest them, I just wish they’d
    do it under their own email address.

    To the phony posting under someone else’s name: Grow a spine, and then grow up.

  8. Tim commented on Nov 30

    I thought the bowling analogy was a complete disaster – wouldn’t some medieval weaponry comparison been more appropriate?

  9. Barry Ritholtz commented on Nov 30


    I understand that usage of the phrase “BitchSlap.” But that wasn’t the context of MY USAGE.

    If anyone is offended, my advice is simple: Get over it.

    As someone who writes (frequently), I refuse to limit my vocabulary / colloquialisms because some people might be offended by some contexts of that usage.

    To readers of my blog/columns: If you are offended by my language, than be forewarned: I have no intention of changing my linguistical style to satisfy someone’s else’s concept of poliitcal correctness.

    If that offends anyone, they are free to change the channel . . .

  10. Idaho_Spud commented on Nov 30

    LOL. Barry Ritholtz, the Sam Kinison of Macroeconomics!

    Screw PC speech. There’s a never-ending supply of people to be offended by various things you might say. You’re still entitled to say whatever you like – and they’re entitled to be offended, comment and call you names.

    Personally I enjoy a little spice in otherwise bland text, and I don’t worry much about it. I probably wouldn’t use that term around an HR type (aka thought police) though :)

    Back to the *point* of your initial posting though. It’s freaking amazing how many people worship at the altar of Greenspan – even financially savvy people who should know better!

    All I see is a guy who’s helped to create a worldwide asset bubble by providing way too much liquidity for way too long.

    Remember that he gave the nod to ‘creative mortgage products’ (neg amort, I/O, Option ARM), just before the Fed began tightening is one of his most duplicitous moments. Ever.

  11. B commented on Nov 30

    I’ve been bitchslapped and I’m a guy. What does that make me? Someone’s bitch? LOL. Come on, enough of this pablum puking politically correct garbage. Don’t ruin Barry’s blog or I’ll be forced to bitchslap Barry and start my own.

    Btw, McCulley is a true geek in every sense of the word. Bowling? He surely isn’t part of Wall Street’s elite. I find that rather refreshing.

  12. dsquared commented on Dec 1

    [Roll enough games without a fingertip ball and you don’t have to worry about overhooking it, as your arm ain’t got the strength. But you do have to worry about underhooking it into the gutter. ]

    Could any of you chaps give me a little help here please? Is this the rough equivalent of facing a googly on a sticky wicket with two hours till stumps? Or sweep-slogging a chinaman over mid-on?

  13. D. commented on Dec 1

    I’ve been working with men forever so I don’t notice the vulgarity but come to think of it, deep down I do appreciate it because I can size up men better by what comes out of their mouths.

    I guess vulgarity can show a lack of respect towards women but if PC is forced onto men, women will end up totally out of the boys’ club.

    I’ve gotten into many arguments with my dad about what came first: intelligence or language. The French and my dad tend to think that language is the key to intelligence. If I understand correctly, those who oppose the use of the word bitch-slapping think that women will get more respect if the word isn’t used. Or maybe, they think that by using the word we are condoning the practice?

    Trust me, as long as there are frustrated men who are stronger than women, they’ll keep on slapping no matter what they call it. May as well call a spade a spade.

  14. Randall commented on Dec 1


    What an offensive moron you are. Treating people with respect and dignity is obviously beyond you. Still waiting for a return of British imperialism? I can assure you at my firm, yes, Wall Street, no one would make such comments. Respect and dignity, even on Wall Street!

  15. Randall commented on Dec 1


    What an offensive moron you are. Treating people with respect and dignity is obviously beyond you. Still waiting for a return of British imperialism? I can assure you at my firm, yes, Wall Street, no one would make such comments. Respect and dignity, even on Wall Street!

  16. Randall commented on Dec 1


    I understand, but sexual or ethnic slurs create a hostile work or school, or, I feel, social environment. I would not have commented, but I noticed the expression and turned to comments and noticed the term that I have several times heard in London used to describe the Chinese. I am Asian, and language makes a big big difference.

    Sorry about a double post.

  17. dsquared commented on Dec 1

    (for what it’s worth, a “chinaman” is a ball from a left-handed bowler which turns toward the right-handed batsman. It’s named after Ellis Achong, the 1930s West Indies left-handed spin bowler. “Chinaman” is simply not a racial epithet).

  18. dsquared commented on Dec 1

    although on second thoughts, usage is bound to differ and these things are often in the ear of the beholder, so I suppose the gentlemanly thing to do would be to apologise and therefore I do.

  19. catablast! media grp. commented on Dec 1

    re: this semantic dispute over the term “bitch-slap” — that’s exactly what it is — a semantic issue.

    get over it. most of us here are grown ups and can recognize barry’s writing style. we also know he’s damn good at his job, so leave it at that.

    For those of us who actually work/worked on the Street, language like that is ubiquitous.

    In fact, there’s nothing like a cup of joe, some misogyny, and the chatter of squawk box every morning at 7 (joke)…..

    In fact, Barry’s use of “bitchslap” should be seen as a positive thing: he’s being honest with himself and he’s letting ya’ll in on how the street mentaility works — if you think brokerage houses and investment banks look & act like UBS commercials, you’re woefully mistaken.

    bottom line: wake up.

  20. Justice Litle commented on Dec 1

    Somewhere, in a parallel universe, there is a sociology-oriented blog with a focus on language and culture.

    Upon visiting this bizarro-world blog, you will find a recent post on the topic of linguistics and gender issues. And underneath this germane and interesting post, you will find a comments section gone badly astray — packed with irrelevant and frivolous commentary on macro financial policy and the federal reserve.

  21. Randall commented on Dec 2


    I appreciate your kindness, and I hope to be as kind from your example. I was quite upset, and your note changed that at once. Thanks, for explaining, and same here. I often look to your fine posts, which was another reason I was upset.

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